Audit triggers GCS disciplinary action

December 12, 2001|By Hillary Dcikerson

Board president Richard Hoyner Tuesday presented a three-paragraph written statement prepared by the board's legal counsel addressing the issue. "I am extremely proud of our board of education, and the way this very serious and sensitive issue was discussed and debated during the closed session last night.

"As a board, we have agreed that certain individuals of our school district have used very poor judgment regarding our district's grant monies and payments.

"Therefore, as a direct result of our discussion, the board of education will proceed with immediate employment-related discipline, while we continue to work with our legal counsel regarding the board's other options for further retribution."

The statement did not refer at whom the disciplinary action would be directed or what it might involve.

In a letter to the board obtained by the Herald Times, auditors from the Gaylord accounting firm of Keskine, Cook, Miller, Smith and Alexander wrote about the recent audit report submitted at the request of the district's legal counsel, the firm of Thurn, Maatsch and Nordberg in Lansing. The letter was part of the materials Keskine presented to the board for its review. "… Mr. St. Germaine was pleasantly surprised to be paid but did not question the payment beyond simple inquiry of the finance director. The payment was approved by the finance director and paid…Basically what has occurred is a new grant administration policy, which was instituted by the new finance director. The finance director at this time did not contact either the past or interim superintendents or the past finance director regarding payment policies."

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The letter continued, providing this explanation: "Based upon the interviews very little communication occurred between past finance directors/superintendents and the current finance director or interim superintendent. Grant accounting procedures were only touched on briefly or not at all. Add to the confusion that the new finance director came from a school district that handled some grants slightly different from the procedure which were followed at GCS."

The evening before Hoyner's formal statement was made, after the board had reconvened to open session, auditor Walt Keskine was on hand to answer the board's questions about the recent audit report his firm submitted.

Keskine explained the board contracted with his firm to do an audit of the grant administrative fee issue. "The purpose of that audit was basically to inform the board of what happened," Keskine noted as he explained the specifics of the audit. Interviews were conducted in person and by telephone; grant applications, budgets, transaction summaries and expenditure reports were reviewed; copies of contracts and job descriptions were reviewed as well as individual payroll records.

Since the board members had only been given the audit report earlier in the day, Keskine answered questions that many of the members presented.

Board member Marilyn Crawford asked Keskine why the audit conducted by his firm at the end of the 2000-01 fiscal year had not picked up the disbursement of funds to the individuals.

Keskine explained that in an audit, tests of a percentage of items are done of programs, receipts and disbursements. He said that the odds of the firm choosing particular items are very slim; however, if evidence of mismanagement or fraud is discovered, then it is the auditing firm's responsibility to inform the proper bodies. "The main focus of an audit is not to discover fraud," noted Keskine.

Referring to a concern which has risen again and again, board member Natalie Davis questioned, "In your opinion, based on what you've seen, could these funds have gone into the general fund and been utilized to offset the salaries of these individuals?"

Keskine launched into an explanation of how grants work before concluding that, yes, the funds could have been used to offset salaries. "Assuming that it is part of his job description, than 10 percent of his salary would be allocated to the grant. That would be one way," said Keskine, referring to the amount allowed in some grants for administrative fees. He explained another way to handle the situation would be to pay individuals for additional services they provide to the grant.

Basing his question on Keskine's assertion that compensation over and above the salaried amount could be paid, board member Russ Soffredine asked Keskine if an addendum or a separate contract would have been appropriate for added responsibilities. Keskine commented that either avenue could have been implemented, but Soffredine pressed the matter, asking whether the district would normally have such contracts in place for additional pay.

"That would be normally true, yes," acknowledged Keskine.

Natalie Davis than clarified no additional contracts nor addenda were in place for any of the four central office employees who were compensated over and above their salaries. Keskine agreed, noting that his firm had indeed examined the contracts during their audit and found no such contracts present.

Meanwhile, off to the side of the room, the seat of Paul St. Germaine, executive director of curriculum - the full-year, salaried employee who received a gross of $49,361 - sat noticeably vacant. St. Germaine and three other full-year, salaried employees - Supt. Carl Hilling, Powers and Human Resources Director Cherie Nutter - were compensated varying amounts in addition to their salaries out of grants the district received. The $64,105 in payments - made without the board's knowledge - were made between Sept. 8, 2000 and Oct. 5, 2001.